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List of Bidders Dwindles for AIG's Unit in Taiwan

A Deal Could Fetch More than $2 Billion; Forced Partnerships

By

Aries Poon and

Perris Lee

Updated Sept. 23, 2009 12:01 a.m. ET

HONG KONG -- Primus Financial Holdings Ltd., along with partner China Strategic Holdings Ltd., and Chinatrust Financial Holding Co. are the only bidders left in the race to buy
American International Group Inc.'s
AIG 0.27%
Taiwan unit, people familiar with the situation said.

One of the people said the bidders had recently raised their offer prices for the unit, Nan Shan Life Insurance Co.

"The bids are still going on. AIG hasn't decided yet," one of the people said.

Wing-Fai Ng, co-chief executive of Primus, said in an interview in late August that the Hong Kong investment company, co-founded by former Citigroup Inc. banker Robert Morse, had offered $1.3 billion for Nan Shan, though other people familiar with the situation said the deal could fetch more than $2 billion.

At the end of August, the list of bidders for Nan Shan included the Primus-China Strategic partnership; Chinatrust; Cathay Financial Holding Co.; and Fubon Financial Holding, which was partnering with U.S. private-equity firm Carlyle Group L.P.

People familiar with the matter said that neither Cathay Financial nor Fubon had received official notification from AIG that they were out of the race.

All four corporate bidders had passed the first round of bids in early July. After that round, investment bank Morgan Stanley, which is running the sale process, told private-equity bidders that they needed to partner with domestic financial institutions to stay in the race. Cathay Financial was the only bidder that was allowed to go solo, people familiar with the situation have said.

The forced marriage between bidders and continuing disagreements about price led private-equity funds such as Bain Capital LLC, MBK Partners Ltd. and Oaktree Capital Management LLC to drop out of the race, they said.